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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Product demand - productivity - prices of other resources - and complementary resources






2. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus






3. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






4. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






5. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.






6. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






7. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur






8. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits






9. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






10. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






11. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment






12. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital






13. Models where firms are competitive rivals seeking to gain at the expense of their rivals






14. The additional benefit received from the consumption of the next unit of a good or service






15. Entry (or exit) of firms does not shift the cost curves of firms in the industry






16. Ed = 8 - infinite change in demand to price change






17. Two goods are consumer substitutes if they provide essentially the same utility to consumers






18. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down






19. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption






20. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






21. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage






22. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit






23. Entry of new firms shifts the cost curves for all firms upward






24. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good






25. The difference between total revenue and total explicit and implicit costs






26. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






27. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price






28. The ability to set the price above the perfectly competitive level






29. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






30. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






31. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






32. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly






33. AVC = TVC/Q






34. Ed = (%dQd)/(%dP). Ignore negative sign






35. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






36. A good for which higher income decreases demand






37. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient






38. The output where ATC is minimized and economic profit is zero






39. All firms maximize profit by producing where MR = MC






40. Costs that change with the level of output. If output is zero - so are TVCs.






41. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






42. The imbalance between limited productive resources and unlimited human wants






43. ATC = TC/Q = AFC + AVC






44. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






45. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.






46. The sum of consumer surplus and producer surplus






47. MUx / Px = MUy/Py or MUx/MUy = Px/Py






48. Ed = 1






49. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






50. Demand for a resource like labor is derived from the demand for the goods produced by the resource